Tuesday, April 14, 2009

The Brewers Association's Numbers and Quandaries

The annual Brewers Association list of top breweries is out. As always, it contains no numbers, rendering it it nearly, but not totally, useless. Numbers matter quite a bit. They point out that the distance between one and five is greater than the distance between six and fifty (or whatever--without the numbers, we don't know). They also tell us whether breweries are growing, standing pat, or shrinking, never mind what their relative position is. (Rogue, which fell two spots, may have increased barrelage, which is certainly more important to the brewery than whether they were passed by Gordon Biersch in the rankings.) Aside from whipping up some brief news, in fact, relative positions don't tell us a whole hell of a lot. That said, since we don't have those numbers and do have this list, I guess we go with the list.

First is the more interesting of two lists--the full list of breweries, along with Jay Brooks' helpful annotations about movement. You can see the whole list here; I'll reprint the Northwest breweries below:

17. Craft Brewers Alliance; Widmer moved up 4 & Redhook 5 as a combined company11. Pyramid Breweries; Up 2 spots, their 2nd two spot jump in a row12. Deschutes Brewery; Up 4 from #16 last year17. Full Sail Brewing; Up 2 from #19 last year36. Rogue Ales; Down 2 from #34, canceling being up 2 the year before44. BridgePort Brewing; Same as last year49. Mac and Jack’s Brewery; Not in Top 50 last year

Two observations present themselves: the forward movement among NW breweries is at the top of the list. Also, the relative balance between Oregon and Washington is growing wider. Mac and Jack's is the only Washington independent on the list (and it's only barely on the list). This trend is even more obvious in the list of craft breweries, where five of six independents are from Oregon, and six of eight are (nominally, anyway) from Oregon:

Ah, but what about that first entry? Well, it turns out the Brewers Association, for reasons obscure to me, omitted the Craft Brewers Alliance:

Changes from last year's list include breweries moving up or down in the rankings based on volume sales. There was one new entrant into the Top 50 Craft list, The Saint Louis Brewery, and two craft brewers have claimed spots in the Top 50 Overall list—Big Sky Brewing Co. and Mac & Jack's Brewery. Consolidation of MillerCoors, last year's number 2 and 3 brewers, opened up a slot, and the merger of Widmer Brothers and Redhook into the company now named Craft Brewers Alliance, Inc. opened up another slot filled by emerging small and independent craft brewers.

This raises a thorny issue for the Brewers Association. Long an advocacy group created "promote and protect small and independent American brewers, their craft beers and the community of brewing enthusiasts." That was all well and good when they could neatly tuck craft breweries into a tidy box: "An American craft brewer is small, independent, and traditional." Craft breweries and macros were qualitatively and quantitatively different categories even a decade ago.

Now the categories are less tidy. As a market matures, you inevitably see consolidation, buy-outs, and now even the macros are making beer indistinguishable from micros (albeit not the best micros). Breweries like Boston Beer Company, by virtue of their success at selling great beer, will one day exceed 2 million barrels. What then? BridgePort, on the list for craft breweries, is owned by Gambrinus, a Corona importer that owns five breweries. Mendocino, a founding craft brewery that still produces the same beer it always has, is owned by UB Group, and international conglomerate of breweries--and is not. The Pyramid/MacTarnahans company is, the Redhook/Widmer company is not. I'm certain this accords with the ever-more-byzantine rules that guide membership in the Brewers Association, but those definitions are increasingly arbitrary.

It's only going to get worse. Eventually, the Brewers Association is going to have to make some hard choices, limiting the pool of brewers to those that fit a neat, clear definition. It's hard to imagine that any guild could both represent Hair of the Dog (annual capacity: +/- 1000 barrels) and Boston Beer (over a million barrels). If they don't, a competing guild will naturally arise to serve the very different needs of these segments of the market.

8 comments:

Jack joyce told me that whatever trade organization decides who is and isn't a 'craft brewery' established rules that excluded Widhook (wrongly in his opinion). I think this might explain their absence from the craf brewers list.

Before I posted this, I actually talked to Rob Widmer. (In rare cases, I do more than rattle off un-informed rants. In rare cases.)

He says that they re-defined "craft brewery" two years ago to handle some of the difficulties I mentioned. Their heart is in the right place--they want to distinguish between breweries that produce faux craft and small breweries. Somehow the new calculation excludes Widmer.

(The A-B thing must not have been enough because they've been included in the past. The merger with Redhook shouldn't be enough because Pyramid/Portland and a number of others have done that and remain on the list.)

Amusingly, even though the Brewers Association booted Craft Brewers Alliance from the list, they hoped they'd still be a member. D'oh!

FWIW, here's how the Brewers Association defines "craft brewery":

An American craft brewer is small, independent, and traditional. Small: Annual production of beer less than 2 million barrels. Beer production is attributed to a brewer according to the rules of alternating proprietorships. Flavored malt beverages are not considered beer for purposes of this definition. Independent: Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewer's brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

I saw the list yesterday and couldn't understand why Craft Brewers was listed under "All Breweries," but not in the "Craft" categories. Reading the definitions for what constitutes a craft beer is smile provoking. Perhaps the 25% ownership issue is the factor eliminating Widmer/Red Hook from the Craft category? I don't think it's the (Byzantine) ". . .at least 50% of it’s volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor," requirement. Not sure who decides when an adjunct is lightening a beer as opposed to enhancing it, but that's for another evaluation.Also, Goose Island is listed independently and ranked #22. They are now part of Craft Brewers Alliance. Is this inclusion as a separate company the result of the date of their acquisition?Top "N" lists are tiresome. Like knowing who grows your food, knowing who makes your beer is more valuable than where they rank.

A (very reliable) little birdy just emailed to say that Boston Beer is just a few thousand barrels below the magic 2 million mark. Also, Gambrinus no longer imports Corona (though the larger point still remains).